Nitin Tanwar Vs ITO (Delhi High Court)
Summary: The Court allowed the writ petition and quashed the seizure of a director’s personal bank account, which had been attached to recover tax dues of a company. The petitioner argued that he was a separate assessee with an independent PAN and regularly filed returns, and therefore his personal account could not be used for recovery of the company’s liability. The Department contended that the account was seized because the company had mentioned this account in its income tax return and had received refunds in it. However, the Court found that the account belonged to the petitioner and no company refund had actually been credited into it. The incorrect disclosure of the account by the company was held to be a bona fide error. The Court ruled that such an error cannot justify attachment of a third party’s account and directed immediate release, subject to submission of correct company bank details.
Introduction
The Delhi High Court recently reinforced the fundamental principle of “Separate Legal Entity” in tax recovery proceedings. The Court ruled that the Revenue Department cannot seize the personal bank account of a Director to satisfy the outstanding tax demands of a company, even when that account was inadvertently disclosed in the company’s tax filings.
